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The implementation of Shanghai-Hong Kong Stock Connect is subject to conditions, including regulatory approvals, completion of all necessary development work and market readiness. The information provided in this presentation is provided on an “as is” and “as available” basis and may be amended or changed in the course of the implementation of Shanghai-Hong Kong Stock Connect. It is not a substitute for professional advice which takes account of your specific circumstances. HKEx and its subsidiaries shall not be responsible or liable for any direct, consequential, incidental, indirect or special loss or damage, howsoever caused, of any kind, arising from the use of or reliance upon any information or materials provided in this presentation, or for any errors, omissions or inaccurate information contained in this presentation.
2
Agenda
Overview of Shanghai-Hong Kong Stock Connect 1
Trading 2
3
Trading System 4
Clearing and Settlement 3
Clearing System 5
Agenda
Overview of Shanghai-Hong Kong Stock Connect 1
4
Trading 2
Trading System
Clearing and Settlement 3
4
Clearing System 5
Key Features of Shanghai-Hong Kong Stock Connect
5
To achieve maximum market efficiency with minimum systemic risks
*Note: Only eligible Mainland investors can participate in Southbound trading
A Shares
Order Routing
Cle
arin
g Li
nk
SSE
SEHK
Sout
hbou
nd
Eligible Shares
ChinaClear
Northbound
Clearing Link
SEHK Subsidiary
SSE Subsidiary
Order Routing
HKSCC
Eligible Shares
Hong Kong Shares
EPs/CPs
Mainland
Hong Kong
SSE Members/ ChinaClear Participants
HK & overseas investors
Mainland investors*
Closed Loop Cross-Boundary Fund Flow to Achieve Stringent Risk Management
Order Routing in Gross for Maximum Price Discovery
Clearing and Settlement in Net for Minimum Cross-boundary Fund Flow
“Home Market” Rules and Laws Apply to the Extent Possible
All RMB Conversion in HK, Facilitating Offset of Currency Conversion
Reciprocal Structure for Alignment of Interest
Quota Applied for Smooth and Stable Launch
Scalable in Size, Scope and Market in the Future
Equal Revenue Sharing to Achieve Win-win Solution
Agenda
6
Overview of Shanghai-Hong Kong Stock Connect 1
Trading System
Clearing and Settlement 3
4
Trading 2
Clearing System 5
Northbound Trading Flow
For secondary market trading only
Investors place orders with EPs
EPs input orders into their A-share-enabled BSS, which will then send the orders to a new system “CSC” (China Stock Connect System, for basic order checking and quota control) via “CC OG” (China Connect Open Gateway)
For executed trade, SSE will send trade confirmation to SEHK Subsidiary, which will forward the confirmation to EPs via the CC OG
7
SSE
EPs
SEHK Subsidiary
HK & Overseas Investors
BSS
CC OG
CSC
Mainland
Hong Kong
BSS: Broker Supplied System CSC: China Stock Connect System CC OG: China Connect Open Gateway
Note: For Southbound trading, SSE Subsidiary will become an SEHK special participant, and route orders placed by Mainland investors (via SSE members) to SEHK through their AMS/3 OG
Eligible Securities
8
Northbound: SSE Securities
Southbound: SEHK Securities
Index Constituent Stocks SSE180 SSE380
HS LargeCap HS MidCap
A+H SSE-SEHK A+H SSE-SEHK A+H
Excluding Shares under risk alert board [風險警示板]
Shares that are not traded in RMB
A+H on other Mainland exchange
Shares that are not traded in HKD
Total No of Stocks* 568 266
Market Capitalisation* 90% 82%
Average Daily Turnover* 80% 78%
List of SSE Securities (for reference) is available on the HKEx website and will be updated upon launch
* No. of stocks as of 10 April 2014; MC as at end of March 2014; ADT is for Jan-March 2014 # For any SSE security not accepted as an SSE Security upon launch due to its being under risk alert board, if it is subsequently
removed from the risk alert board, it will be accepted as an SSE Security if it falls under any of the selection criteria
Detailed Arrangements for SSE Securities
9
Northbound Trading
Only sell orders are allowed if: ceases to be constituent stocks of relevant indices; and/or subsequently put under risk alert board; and/or corresponding H share of A+H ceases to be traded on SEHK;
as the case may be
A share of A+H shares will be accepted as SSE Security after the stabilisation period of: both A and H shares if both are simultaneously listed H share if it is subsequently listed on SEHK A share if it is subsequently listed on SSE
If only the H share of an A+H share is suspended:
whether investors will be allowed to buy and/or sell the A share is being considered by the relevant regulators. The final arrangement will be announced in due course.
Entitlement: if it is an SSE Security, both buy and sell orders are allowed if it is not an SSE Security but is SSE-listed, only sell orders are allowed if it is not SSE-listed, cash options may be offered (to be confirmed)
Detailed Arrangements for SEHK Securities
10
Southbound Trading
Only sell orders are allowed if: ceases to be constituent stocks of relevant indices; and/or corresponding A share of A+H ceases to be traded on SSE; and/or H share issuer lists its A share on a Mainland exchange other than SSE;
as the case may be
H share of A+H shares will be accepted as SEHK Security after the stabilisation period of: both A and H shares if both are simultaneously listed H share if it is subsequently listed on SEHK A share if it is subsequently listed on SSE
If only the A share of an A+H share is suspended:
whether investors will be allowed to buy and/or sell the H share is being considered by the relevant regulators. The final arrangement will be announced in due course
Entitlement:
if it is an SEHK Security, both buy and sell orders are allowed if it is not an SEHK Security but is SEHK-listed, only sell orders are allowed if it is not SEHK-listed, buy/sell is not allowed on SEHK (ChinaClear will consider alternative
arrangement to handle such entitlement)
When to calculate: Real-time during trading hours Daily Quota Balance: Daily Quota – Buy Orders + Sell Trades + Adjustments (e.g. Buy Order cancelled, Buy Order
rejected by SSE, Buy Order executed at a better price) If Daily Quota balance ≤ 0:
• During opening call auction [開盤集合競價] (Pre-opening): Reject new buy orders until DQ Balance becomes positive (e.g. due to Buy Order cancellation)
• During continuous auction [連續競價] (Continuous Trading): Suspend buy order input for the remaining of the day • Buy orders already input in CSC before suspension will not be affected
Quota To control initial pace and size of cross-boundary fund flows
11
Northbound Trading of SSE Securities
Southbound Trading of SEHK Securities
Aggregate Quota (AQ) RMB 300b RMB 250b
Daily Quota (DQ) RMB 13b RMB 10.5b
Aggregate Quota
When to calculate: At the end of each trading day Aggregate Quota Balance: Aggregate Quota – Aggregate Buy Trades + Aggregate Sell Trades If Aggregate Quota Balance < Daily Quota: Suspend buy order input for the next trading day If Aggregate Quota Balance increases to Daily Quota level: Resume buy order input for the next trading day
Daily Quota
Quota control only applies to buy orders, i.e. sell orders are always allowed regardless of quota level Quota is used on a first-come, first-served basis
Key Principles
Quota Info
Quota Information will be disseminated on HKEx website at scheduled time
Northbound Trading Hours
Follow SSE (home market) trading hours Once Northbound orders are accepted by SSE, they will be matched in strict price-time priority
with all other SSE orders as per SSE current rules EPs can start inputting SSE Securities orders 5 minutes prior to the start of SSE trading
session in the morning and in the afternoon
SSE Trading Session Time Time for CSC to accept Northbound orders
Opening Call Auction [開盤集合競價] 09:15 – 09:25 09:10 – 11:30 Continuous Auction [連續競價]
(Morning) 09:30 – 11:30
Continuous Auction [連續競價] (Afternoon) 13:00 – 15:00 12:55 – 15:00
12
Notes: (1) 09:20 – 09:25: SSE will not accept order cancellation (2) (a) 09:10 – 09:15; (b) 09:25 – 09:30; (c)12:55 – 13:00: Orders and order cancellations can be input into CSC but will not
be processed by SSE until market opens (3) Orders that are not executed during the opening call auction session will automatically enter the continuous auction
session
Holiday Arrangement
Initially, Hong Kong and overseas investors will only be allowed to trade SSE Securities on days when: both SEHK and SSE are open for business; and banking services of both markets are open on the corresponding money settlement days
13
Going forward, will explore with the banking industry for banking support on public holidays, such that both Northbound and Southbound trading can follow home market’s trading calendar
Date Hong Kong Mainland
Shanghai-Hong Kong Stock Connect
Trading (T-day)
Money Settlement (for T-1 day’s
trades)
Securities Settlement
(for T-day’s trades)
16 Apr 2014 (Wed) Business Day Business Day
17 Apr 2014 (Thu) Business Day Business Day ^ ^
18 Apr 2014 (Fri) Public Holiday Business Day
21 Apr 2014 (Mon) Public Holiday Business Day
22 Apr 2014 (Tue) Business Day Business Day #
Similar arrangement for Southbound trading (Southbound trading will be opened when the Mainland market is open on the corresponding T-day, and Mainland banking services are available on T+1 and T+2)
^ Although 17 Apr is a business day for both Hong Kong and Mainland, if EPs trade SSE Securities on 17 Apr, CPs may have difficulty settling their money positions with HKSCC on 18 Apr, which is a public holiday in Hong Kong. Hence Northbound trading will not be open on 17 Apr. # There will not be any money settlement for Northbound trades on 22 Apr as 21 Apr is not open for Northbound trading. However, as CCASS is open for business on 22 Apr, it will still process money transactions in relation to nominees activities with respect to SSE Securities, if any.
Severe Weather Conditions
If SSE notifies the market about the potential service suspension of trading on the following trade day due to severe weather conditions, SEHK will notify the market accordingly
Initially, in case of Typhoon signal no. 8 or above (T8) or Black rainstorm in Hong Kong:
14
Scenarios Northbound Trading of SSE Securities Hong Kong Market today*
T8 / Black rainstorm issued before HK market opens (i.e. 9:00 a.m.) Not open Not open
T8 issued between 9:00 a.m. and 9:15 a.m. Not open Trading terminates after Pre-opening Session
T8 issued after SSE market opens (i.e. 9:15 a.m.) Arrangement to be announced in due course
Trading terminates in 15 minutes
Black rainstorm issued after HK market opens (i.e. 9:00 a.m.)
Trading continues as normal
Trading continues as normal
T8 / Black rainstorm discontinued at or before 12:00 noon
Trading resumes after 2 hours
Trading resumes after 2 hours
T8 / Black rainstorm discontinued after 12:00 noon Not open Not open
Going forward, will explore with the banking industry for banking support on typhoon / rainstorm days, such that Northbound trading can follow home market’s trading calendar
Northbound Trading: Initial Arrangements (I)
Largely follow SSE trading rules
But with a few exceptions
1. Stock Code 6 digits (for order input and trade confirmation)
2. Modify Order Not available on SSE
3. Day (Turnaround) Trading Not available on SSE
4. Manual Trade Not available on SSE (except for block trade)
5. Trading Currency RMB
6. Board Lot 100 shares (applicable for buy orders only)
7. Odd Lot Sell orders only
8. Maximum Order Size 1 million shares
9. Spread Uniform at RMB 0.01
10. Price Limit ±10% on previous closing price (±5% for ST and *ST stocks)
SSE’s Current Arrangement Northbound Trading of SSE Securities
11. Order Types Limit orders* (whole day); Market orders (continuous auction)
Limit orders only
12. Block Trade Allowed Not allowed
13. Short Selling Allowed (restrictive) Naked short selling not allowed
14. Margin Financing Allowed (restrictive) Not allowed to participate in Mainland’s margin trading and securities lending [融資融券] 15. Stock Borrowing & Lending Allowed (restrictive)
* SSE limit orders may be executed at the input price or at a better price 15
Northbound Trading: Initial Arrangements (II)
Note the following are not available for Northbound trading:
Northbound Trading of SSE Securities
1. Central Trade Feed (CTF)* Not available (Retrieve trade reports through ECP)
2. Broker Bulk Cancel Order Not available (Orders need to be cancelled one by one)
3. Cross Trading Device Functions Not available (Under emergency condition, EP may request the Exchange to submit order cancellation requests on its behalf to cancel all of its outstanding orders)
4. Price / Consideration Warning Not available
5. 24-spread rules Not available (Orders will be subject to SSE rules (e.g. ± 10% price limit))
6. Modify Order Not available (EP needs to cancel the original order and insert a new one)
7. Trading Support Facility (TSF) Not available
16
* EPs can download the trade reports through ECP (Electronic Communication Platform) around 3:30 pm on T day, the same system for stamp duty reporting. EPs can login to the ECP by inputting the user ID with the “TO” user group (i.e. user ID of MXXXXXTOXXX) and Password. TO user group is for downloading trade files such as Callable Bull/Bear Contract (CBBC) Post Mandatory Call Event (MCE) trade files and other trade files distributed to EPs under contingency for reconciliation purpose. Report format is the same as CTF
Northbound Trading: Pre-trade Checking
What is Pre-trade checking?
A mechanism to ensure EPs will have sufficient shares to settle their sell trades
How is it done?
CCASS will take snapshot of each CP’s SSE Securities holdings at the end of each business day and replicate to CSC to facilitate pre-trade checking of SSE Securities on the next day
Sell orders by an EP will be rejected by CSC if the EP’s cumulative sell quantity in that stock for the day is higher than its stockholdings at market open
Who to ensure investors will not oversell?
EP’s responsibility to ensure they have in place procedures and systems to prevent their clients from day trading and overselling of SSE securities
17
SSE
CSC Passed
Pre-trade Checking
?
CCASS EP1 CP1
EP2 CP2
EP
EP3 EP4 CP3
Place sell order
Replicate shareholding information to CSC on each
day end No Yes
Route order to SSE
Reject order
Order routing Shareholding replication
EPs should remind investors to transfer shares to the selling EP on T-1 day
Northbound Trading: Technical Set-up Overview
Northbound trading must be conducted through BSS and CC OG
Hosting services for CC OG is available
No MWS and terminal for Northbound trading
CC OG as interface between EP BSS and CSC
Exclusive for trading in SSE Securities
Similar protocol to existing AMS/3 OG
No smart card required
No SSE market data provided
Need to acquire new throttles (existing throttles used for AMS/3 trading cannot be transferred to CC OG for Northbound trading, and vice versa)
18
BSS
AMS/3 OG CC OG
Client Order
Orders in HK stocks Northbound
Orders
AMS/3 CSC
SSE Trading System
Mainland Hong Kong
Fees and taxes applicable to a Northbound trade:
Fees and taxes to be confirmed with the relevant regulators/authorities:
19 Note: Mainland taxes will be rounded to the nearest cent. New CCASS Fee will be rounded up to two decimal places
Items Rate Charged by
Handling Fee (經手費) 0.00696% of the consideration of a transaction per side SSE
Securities Management Fee (證管費) 0.00200% of the consideration of a transaction per side CSRC
Transfer Fee (過戶費) 0.06000% on face value per side ChinaClear
Stamp Duty (交易印花稅) 0.10000% of the consideration of a transaction on the seller SAT
Items Description Charged by
New CCASS Fee • A new fee for providing depository and nominee services to
CPs for SSE Securities • Subject to SFC’s approval
HKSCC
Dividend Tax • Applicable to cash dividend and bonus issue • Subject to clarification with SAT SAT
Capital Gain Tax • Applicable to share disposal • Subject to clarification with SAT SAT
SAT: State Administration of Taxation
Costs of Participating in Northbound Trading Fees & Taxes
Note : The above fees and taxes will be collected via day end DDI on T Day
In principle, follow the same charging scheme as that for trading in AMS/3 (subject to SFC’s approval):
No entitlement throttle, need to purchase new throttles to trade Northbound Lower hardware costs for CC OG compared with AMS OG as security card is not required Procurement of CC OG (except for hosting service) through HKEx
Costs of Participating in Northbound Trading Throttles and Hardware Charging Scheme
20
Item Proposed Charges
One-off Throttle Fee HKD50,000 per throttle (same as current)
Throttle Monthly Fee HKD960 per throttle (HKD480 per backup throttle) (same as current)
CC OG Hardware HKD28,000 (Standard) / HKD115,000 (High Availability)
CC OG Monthly Fee HKD1,250 per CC OG
Market Information
21
Market Data for Trading
■ Data feed Directly from China Investment Information Services Limited (CIIS)*中國投資信息有
限公司 (http://www.ciis.com.hk/New_Web/eng/index.html) Indirectly from CIIS’ licensed Information Vendors (more than 20 IVs providing
Level-1, Level-2 or A+H collaboration services; see CIIS’ website for IV list)
■ View data only Level-1 real-time SSE market data also available through internet of Mainland IVs
(full list: http://ywtb.sseinfo.com/ywtb/show.do) or websites such as Google Finance and Yahoo
Issuer Announcements
■ In Chinese only ■ Through these channels:
SSE website Issuer’s websites HKEx website – China Stock Market Web (only displayed up to T-1 day)
(http://www.hkex.com.hk/eng/csm/homepage.asp?LangCode=en) Four official appointed newspapers and their websites Shanghai Securities News 上海證券報 Securities Times 證券時報 China Securities Journal 中國證券報 Securities Daily 證券日報
* CIIS is the wholly owned subsidiary of SSE InfoNet Ltd., the sole exclusive authorised organisation managing the securities information of SSE
Agenda
22
Trading System
Overview of Shanghai-Hong Kong Stock Connect 1
Trading 2
4
Clearing and Settlement 3
Clearing System 5
Settlement of Northbound Trades between ChinaClear, HKSCC and CPs
23
Stock settlement on T-day, and money settlement on T+1 HKSCC will collect RMB from ChinaClear and Net Buy CPs before paying RMB to Net Sell CPs and
ChinaClear, if applicable Detailed money settlement arrangement is subject to discussion with banks
Hong Kong and Overseas Investors Net Sell
Hong Kong and Overseas Investors Net Buy
HKSCC CPs HKSCC CPs
ChinaClear
HKSCC HKSCC T+1 16:00
T+1 09:30
T+1 After 12:30 (Tentative)
T+1 By 12:00 (Tentative)
T-day 18:00
T-day 18:00
T-day 18:00
T-day 16:30
Securities Money (RMB)
Note: Provisional Clearing Statement (PCS) will not be applicable for Northbound trades
Two Batch Settlement Runs for settling CNS Positions (CNS BSRs) SI Settlement will only be allowed after the completion of ALL CNS BSRs at around 18:00 Only one Batch Settlement Run for settling SI Positions (SI BSR) at around 19:30
24
Settlement of Northbound Trades in CCASS Securities Settlement on T day
09:15 15:00 16:00 16:30 19:30
SI BSR
Cash prepayment to release CNS allocated
shares
SI Settlement via DI
18:00
2nd CNS BSR
1st CNS BSR
Final Clearing
Statement
Northbound Trading Sessions
25
Settlement of Northbound Trades in CCASS Money Settlement on T+1, in RMB via RTGS
Until 20:30 08:00 09:30 After
12:30 12:00
T-day T+1
CPs download Statement of
Money Ledger for money obligations
CPs enquire money obligations for
next day settlement: • Settled Position Report • Enquire Money Position
Designated Banks receive CHATS
Payment Instruction Report
Designated Banks make RTGS payments to HKSCC on behalf of CPs (for CPs with net payable
item)
HKSCC makes RTGS payments to
CPs (for CPs with net receivable item)
Tentative Tentative
FOP: Free of Payment
Transfer SSE Securities within CCASS
A. Within CCASS Participants’ own stock accounts Follow the existing practice and schedules (including function times and file validation runs) a) ATI to transfer among stock segregated accounts without statements b) STI to transfer into or out of stock segregated accounts with statements (SSA)
B. Between Counterparties • SI to transfer between Counterparties, with new schedules • SI in SSE Securities must be executed on an FOP basis
26
09:15 11:45 15:00 17:00 18:00
A Shares Trading Sessions
1st SI matching
run
2nd SI matching
run
3rd SI matching
run
4th SI matching
run
Input DI to online settle SI
19:30
SI BSR
DCP: Direct Clearing Participant GCP: General Clearing Participant NCP : Non-Clearing Participant (being an Exchange Participant) CCMS Collateral Account is a Control Account for safekeeping of Stock Collateral Only 27
Determine Sellable Shares for Pre-Trade Checking (1) DCP / GCP serving ONE EP only
Total Balance, except those in A/C 20
CCASS Stock Accounts of B12345*
SSE Securities Balance
01 Clearing A/C 100
02 Entitlement A/C 200
03 Stock Segregated A/C 300
20 Collateral Control A/C 400
21 Stock Segregated A/C 500
22 Stock Segregated A/C 600
CCASS: SSE Securities Balance on T-1 Day end
EP Sellable Shares
12345 1,700
xxxxx XXX
xxxxx X,XXX
xxxxx XXX
xxxxx XX,XXX
xxxxx XXX
1,700
* A DCP, or a GCP clears for itself or for one EP only
CSC: Sellable Shares for Pre-Trade Checking on T-day
28
Determine Sellable Shares for Pre-Trade Checking (2) GCP serving multiple EPs
CCASS Stock Accounts of B54321*
SSE Securities Balance
01 Clearing A/C 100
02 Entitlement A/C 200
03 Stock Segregated A/C 300
20 Collateral Control A/C 400
21 Stock Segregated A/C – NCP1 500
22 Stock Segregated A/C – NCP1 600
23 Stock Segregated A/C 700
24 Stock Segregated A/C – NCP2 800
CCASS: SSE Securities Balance on T-1 Day end
EP Sellable Shares
12345 1,700
54321 300
NCP1 1,100
NCP2 800
xxxxx XX,XXX
xxxxx XXX
CSC: Sellable Shares for Pre-Trade Checking on T-day
1,100
800
Note : On T day, after securities settlement, GCPs need to transfer the settled SSE Securities to each NCP’s designated CCASS stock segregated accounts before day end GCPs may need to execute cash prepayment to release on-hold CNS allocated A shares before transfer of shares For GCP serving multiple EPs, SSE Securities Balance in CCASS Accounts 01, 02, 17, 18, 19 will not be allowed to map to any EP
* A GCP clears for itself and multiple EPs
300
Total Balances of the mapped accounts only
29
Stock Code for Northbound Trading
EPs need to input 6-digit SSE Securities codes in their orders
CCASS will use 5-digit stock codes in its reports and on-line function
60XXXX 9XXXX 60XXXX
General Rules
Exceptions
• There may be exceptions, for example, in cases of benefit entitlement stocks with stock code not starting with “60” may be distributed
• Participants will be informed of the detailed arrangement via circulars when that happens
Agenda
30
Clearing and Settlement 3
Trading System 4
Overview of Shanghai-Hong Kong Stock Connect 1
Trading 2
Clearing System 5
Overview – Trading System
31
China Stock Connect system (CSC): the centralised gateway for Northbound trading under Shanghai-Hong Kong Stock Connect
China Connect Open Gateway (CC OG): for trading session establishment between Broker Supplied System (BSS) and CSC
Open Message protocol changes
CC OG connectivity arrangement
Rollout arrangement
1
2
3
4
5
Major Elements of CSC Infrastructure
33
China Stock Connect System (CSC)
Support the collection and submission of orders in SSE Securities Two major components:
a) order capturing & consolidation from BSS operated by EPs; and b) order submission to the SSE’s gateway devices and relay of order and trade
confirmations returned by SSE
China Connect OG
(CC OG)
EP Interface
A separate version of OG (i.e. CC OG) to be used by EPs to handle orders in SSE securities
No SSE market data will be provided through the CC OG (note: Currently SSE is providing market data to Hong Kong information vendors through its subsidiary in Hong Kong, i.e. China Investment Information Services Limited. EPs can obtain such data from Hong Kong information vendors)
Network Connectivity
For CC OG installed at EPs’ offices: EPs are required to install new dedicated SDNet circuits to connect their CC OG to CSC
For CC OG installed at HKEx’s hosting service data center: the existing HSN connection can be used
Can only access CSC via BSS and CC OG CSC converts the CC OG message protocol (similar to the OG protocol used for AMS) to the format used
by the SSE trading system CSC does not support MWS and Trading Terminals
China Stock Connect (CSC) System
34
What does it do?
Support order capturing & consolidation from HKEx Participants for order submission to SSE
Performs order validation and daily quota checking
The data flow
Valid orders: forward to SSE trading system via SSE’s provided gateway
Order input acknowledgement: send to BSS when it is accepted by CSC
Order and trade confirmations returned by SSE trading system: forward to BSS via CSC and CC OG
Various timing:
Order confirmation: will be returned only after the market is open
Order input time: support order input 5 minutes prior to SSE market open and during mid-day close
Order cancellation request: can be submitted prior to market open but will not be executed and acknowledgement will not be returned to BSS until market is open due to the SSE trading system behaviour
Via BSS and CC OG
Separate OG: CC OG is separate from the existing AMS OG
Location: At EP’s office or HKEx’s data centre (hosting service)
Hardware: Order new hardware from HKEx or reuse OG hardware released as a result of OCG migration
BSS/CSC interface: Allows EP’s BSS to establish a trading session with CSC for order submission in a manner similar to that of OG for AMS
Similar protocol: A special version of OG, uses a protocol similar to that of AMS with minor changes (e.g. 6 digit stock code)
Supports limit orders and cancel orders only
Provides static reference data download
Stock price update messages will not be supplied, EPs have to source a separate market data feed for SSE securities
No smartcard device:
Adopts software based data encryption and authentication mechanism
Lower cost of ownership and ease of operation
Separate throttles: EPs have to subscribe separate CC OG throttles specific for the SSE market
China Connect Open Gateway (CC OG)
35
Areas of Change Open Message Affected Impact on BSS / EP
1 CSC only supports the following order related transactions:
• Order Input (limit order only) • Order cancel • Order activity enquiry
- • Limit order at SSE is able to match multiple price queues.
• Other order/trade related transactions such as Modify Order, Odd Lot Order Input, Manual Trade, Cross Trading Device Functions and etc. are not supported.
• Mass order cancel has to be done by HKEx upon EP request.
2 Support 6-digit SSE stock code. • 1500 O-COI (BS Order Input) • 1572 O-ROA (Order Activity Enquiry
Response) • 2101 O-BCS (Security Static Information) • 2221 O-MOC (OG Configuration) • 3570 O-EOA (Order Activity Enquiry) • 1500 O-COI (BS Order Input) • 1572 O-ROA (Order Activity Enquiry
Response) • 2101 O-BCS (Security Static Information) • 2221 O-MOC (OG Configuration) • 3570 O-EOA (Order Activity Enquiry)
Enhancement on BSS and its backend applications may be required to support 6-digit security code.
Open Message Changes (I)
36
Areas of Change Open Message Affected Impact on BSS / EP
3 The optional field LONG-OSN-SUPPORT-FLAG (tag 99863) in message 9009 is ignored by CSC
• 9009 O-ESL (BS Session Logon to OG)
The Open Message protocol still supports this optional field but it has no effect on CSC
4 CSC will not provide dynamic market data and closing price
- EP should subscribe market data from SSE market information provider if required
5 No price warning and consideration warning checking on order input
• 1500 O-COI (BS Order Input) CNFM-FLAG (tag 99045) must be set to ‘N’ in Order Input message
6 Changes in reference data download • 2120 O-BTT (Market Trading Timetable)
• 2122 O-BMS (Market Static Information)
• 2124 O-BPM (Page Map Information)
• The market trading time table is empty • Index code in market static information
message is always set to blank • Page map information message is removed
7 CSC will not provide market trading status update
• 2106 O-BTM (Market Trading Status Update)
CSC will not notify BSS of market status change (i.e. market open, current trading session and market close). EP should subscribe market data from SSE market information provider if such information is required
8 CSC will not support Central Trade Feed (CTF) service
• 9017 O-CNR (Host Notification Recovery)
BSS should not send message 9017 with CTF-INDICATOR (tag 99445) set to ‘Y’. The Exchange will provide trade files in existing format via Electronic Communication Platform (ECP)
Open Message Changes (II)
37
SDNet/2 will be used for connection to CSC. A pair of circuits is required
A SDNet bandwidth of 2 Mbps is required for CC OG connection
EPs are required to subscribe a new pair of SDNet/2 circuits dedicated for CC OG
The installation fee and monthly subscription fee are listed below for reference only. For new circuit installation, an additional network switch rental of HK$100 per switch is required
One-off Installation Fee (2 circuits)
Additional Monthly Fee (2 circuits)
Install one pair of 2M SDNet/2 circuits Not applicable ≤ HK$3,800
The existing HSN connection can be used without any additional setup
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CC OG Connectivity
For CC OG installed at EP’s premises:
For CC OG installed at HKEx’s data center (hosting service):
CC OG message specifications – already published on HKEx Website. EPs have to enhance their broker supplied system (BSS) and their backend systems for various minor changes associated with CC OG
CC OG Simulator Package – to be supplied in mid May 2014 to facilitate EP’s offline testing of their BSS enhancement
BSS Certification Test Package – to be distributed to EPs in mid May 2014. The package specifies various functional test cases that need to be successfully executed by EPs under CSC End-to-End testing environment before market rehearsals
CSC End-to-End test sessions – to be provided in early June 2014. EPs will be requested to return their declaration by mid August 2014 on their system readiness before they can participate in the market rehearsal scheduled for September 2014
Market rehearsals will be conducted in September 2014. It will last for several weekends to cover functional, performance and disaster recovery tests
Line Installation – EP should complete installation of the new SDNet/2 circuit prior to the installation of CC OG
CC OG installation – EP should place the order for installation of new CC OG (or reconfiguration of redeployed OG hardware) and subscription of CC OG throttles prior to the market rehearsals
Support EPs’ Technical Preparation and Testing
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Agenda
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Clearing and Settlement 3
Overview of Shanghai-Hong Kong Stock Connect 1
Trading 2
Trading System 4
Clearing System 5
Overview of CCASS System Modifications
Access Requirement
No additional requirement for CCASS access, i.e. leverage on
existing infrastructures with CCASS Terminals, Participant Gateways
(PG) and SDNet/2 lines
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CCASS System Modifications Multiple markets capability
CCASS System Modifications Multiple Market Capability
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New market code “MAMK” for A-share market
“MAMK” will be shown in online functions, reports, data files and PG messages.
Separate report folder “MAMK” when downloading reports via online function “Report download (ECQC)”
Separate set of reports and data files for A-share market
Separate set of broadcast messages with new market code “MAMK”
CCASS stock codes remain in five digits with following conversion guideline
Note: May have exceptions (e.g. distribution of non-SSE-listed entitlement stocks); suggest to build in flexibility for different conversion in the future
New settlement cycle and processing schedule for A-share market
60XXXX 9XXXX 60XXXX
Existing SSE stock codes:
6-digit Start with “60”
SSE stock codes for Northbound Trading:
Same as SSE’s
Mapped to CCASS:
5-digit Replace “60” with “9”
CCASS System Modifications On-line functions under multiple markets
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Same online function is used for accessing data of both Hong Kong and A-share markets.
Different online function service time will be setup for the new A-share market
New value “MAMK – MAINLAND A-SHARE MARKET” for the MARKET field for various on-line functions:
CCASS System Modifications Report / Data File under Multiple Markets
2 categories of reports (existing design):
Global – single report showing information of all markets (e.g. Statement of Money Ledger)
Market – show information of a specific market (e.g. FCS for A-share market will be generated separately from HK market), i.e. one set for HK market and one set for A-share market
New reports introduced:
3 global reports for information on Mainland Settlement Deposit, Mainland Security Deposit and the associated interests
24 reports for A-share market: 23 are existing reports for HK market, 1 new report for new CCASS Fee with data download file (subject to SFC approval)
Changes of existing reports:
Current ATI and STI Batch Input Control Reports will be changed from market reports to global reports
New market code information shown in Report download function (ECQC) and Broadcast Message Listing (CETMB01)
Change the market code of the following money ledger transactions from global to market in report and data download file of “Statement of Money Ledger (CSEMA08/CSEMS08)” :
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M/L Transaction Type Description
73 INTERESTS ON DR BALANCES
74 MANUAL ADJUSTMENT (EMSI GENERATION)
77 MANUAL ADJUSTMENT
CCASS System Modifications Participant Gateway (PG) Message Template
Changes on PG message templates:
New value “MAMK” will be added for Market field in both input and output messages
New sections will be added in “Enquire Money Position / Instruction” output message for A-market position statuses
A separate set of Market reports and broadcast messages will be generated for A-share market (e.g., FCS)
Same PG for both markets:
The existing PGs installed by participants can be used to handle clearing and settlement activities of both HK and A-shares
PG End-to-End test:
Can conduct PG End-to-End test tentatively 1 month before market rehearsal
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Technical Preparation by CPs for Participating in Shanghai-Hong Kong Stock Connect
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For CPs using CCASS
Terminals
Handle 5-digit to 6-digit stock code mapping for A-share market
Handle separate set of reports and data files for A-share market
Change market code of the money ledger transactions from global to market in report and data download file of “Statement of Money Ledger (CSEMA08/CSEMS08)”
New report for collection of new CCASS fee with data download file (subject to SFC approval)
For CPs using PG
Handle new market code “MAMK” for Market field in both input and output messages
Handle broadcast/notification messages with new market code “MAMK” for A-share market (MA191_T27B)
Handle new sections added in “Enquire Money Position / Instruction” output message for A-share market position statuses (MT536_T02G)
Possible Impacts to those CPs who do NOT Participate in Shanghai-Hong Kong Stock Connect
For those CPs who use CCASS Terminals Change market code of money ledger transactions from global to market in report and data
download file of “Statement of Money Ledger (CSEMA08/CSEMS08)”
For those CPs who use PG Handle broadcast/notification messages with new market code “MAMK” for A-share market
(MA191_T27B)
Handle new sections added in “Enquire Money Position” output message for A-share market position statuses (MT536_T02G)
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OLD : 05JAN15 05JAN15 M00536102 77 GLOB MANUAL ADJUSTMENT
NEW : 05JAN15 05JAN15 M00536102 77 HKMK MANUAL ADJUSTMENT
Sample Reports, Data Files and PG message specifications – already published on HKEx Website. CPs shall assess if they will enhance their backend systems for various minor changes associated with CCASS
PG End-to-End Test Package – to be distributed to CPs in mid Jun 2014. The package specifies various functional test cases that need to be successfully executed by CPs under PG End-to-End testing environment before market rehearsals
PG End-to-End test sessions – to be provided in July 2014. All PG participants, whether joining Shanghai-Hong Kong Stock Connect or not, are required to join this test session. CPs will be requested to return their declaration by mid August 2014 on their system readiness before their PGs can participate in the market rehearsal
Market rehearsals – will be organized in September 2014. It will last for several weekends to cover functional, performance and disaster recovery tests
Soft launch – considering to roll-out CCASS related changes shortly before the start of Northbound trading. CPs need to align their system rollout with CCASS and may be required to prepare for system fallback if necessary
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Support CPs’ Technical Preparation and Testing
More Information on the Website
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Visit Shanghai-Hong Kong Stock Connect Web Corner at
www.hkex.com.hk/chinaconnect
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Report ID Report Description Report ID Report Description
CCLID01 Intra-Day Trade File (available in data file format only) CSESM01 Statement of Stock Movement (By Stock)
Report
CCLSI01 SI Status Report CSESM02 Statement of Stock Movement (By Account) Report
CCLSI02 SI Activity Report CSESP01 Settled Position Report
CCLTN05 Final Clearing Statement CSESP04 Intra-Day Settled Position Report
CCLUS01 Unmatched SI Report CCNAN05 Corporate Announcement Master Data File
CFIBI01 Buy-In Notification Report CCNAN06 Corporate Announcement Maintenance Activities Report
CSEAT02 STI Activity Report CCNPT01 Nominee Functions Input Activities Report
CSEAT03 STI Status Report CCNPT02 Entitlement Statement
CSEOP01 Next Settlement Day Due / Overdue Position Report CCNPT03 Participant Voted Quantity Exception Report
- On Voting Deadline
CSESB01 Daily Stock Balance Report CCNPT04 Participant Voted Quantity Exception Report - Before Voting Deadline
CSESE01 Settlement Report CCNPT06 Nominee Fees Refund Report
CSESI02 Intra-Day ISI / SI Full List CCDPC01* Monthly New CCASS Fee Collection Report
Appendix 1: CCASS - List of A-share Market Reports
Total 24 A-share Market Reports Note * : Newly added report subject to SFC approval http://www.hkex.com.hk/eng/newsconsul/chinaconnect.htm
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Appendix 2: CCASS - List of Global Reports
Note ** : Reports change from market to global
Report ID Report Description Report ID Report Description
CCLEI01 SI Batch Input Control Report CSEMA29 / CSEMS29 Settlement Related EPI Listing
CCMSS05 Collateral Security Batch Input Control Report CSEMP02 CCASS Funding Projection Report for Participant
CCSSG01 Stock Segregated Account with Statement Service Master Listing CSEPI01 Payment Instruction Input Activity Report
CCSSG02 Stock Segregated Account with Statement Service Maintenance Activity Report CSETF13 TSF Exception Handling Report
CCSSU01 SSA Batch Input Control Report CRMIM01 Intra-day Marks and Collateral Collection Report
CETMB02 Broadcast Message Listing CFIPM01 Marks and Collateral Collection Report
CIPCL03 Monthly ISI Counterparty List CRMMG01 Intra-day Margin Payable Report
CIPEI01 ISI Batch Input Control Report CRMMG02 Margin Payable Report
CSEAT01** STI Batch Input Control Report CRMNP01/2 NCP Marks Projection Report
CSEBA01** ATI Batch Input Control Report CRMNP03/4 NCP Margin Projection Report
CSECP03 Cash Prepayment / TSF Payment / Intra-Day Payment Instruction Maintenance A/T Report CCNVT08 CRP Batch Input Control Report
CSEMA08 / CSEMS08 Statement of Money Ledger CFIMC01 Monthly Stock Balance Report
CSEMA28 / CSEMS28 DDI / DCI / EPI Summary for Participant CCMPS01 Maintain Preferred Single Settlement Currency
Activity Report
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Appendix 2: CCASS - List of Global Reports (con’t)
Total 57 Global Reports Note *** : Newly added reports
Report ID Report Description Report ID Report Description
CRMSD01*** Mainland Settlement Deposit Payable Report CCMDS01 Statement of Collateral Account
CRMGF01*** Mainland Security Deposit Payable Report CCJCC12 Corporate Communications Event List
CCMIA12*** Quarterly Interest Report for Mainland Settlement Deposit and Mainland Security Deposit CCJCC13 Recipient Master Maintenance Activity Report
CCMSC01 Specific Cash Collateral Instruction Activity Report CCJCC14 Corp Comm Event Recipient List Activity Report
GFR608 Statement of Guarantee Fund Contributions CCJCC15 Corp Comm Recipient Batch Input Control Report
GFR616 NCP(s) Guarantee Fund Contribution Projection By Position CCJCC21 Monthly Recipient Master List
CCMPY01 Posting / Collateralisation Result Report CEFUV01 Tender Instruction Batch Input Control Report
CCMPY02 Posting / Collateralisation Result Report CEPAA01 New Issues Application Input Activities Report
CCMCA02 Collateral Account Balance Report CEPAB01 New Issues Application Input Activities Report
CCMMV01 Participant Collateral Account Movement Report CEPBE01 New Issues Entitlement Report
CCMSU04 Special-Use Collateral Balance Report CEPBV01 EIPO Batch Input Control Report
CCMIR02 Collateral Parameters Information List CEPBV02 EIPO Confirmation Batch Input Control Report
CCMIA02 Monthly Interest & Accommodation Fee Report - Detail CEPSA01 Yellow Form Share Allotment Report
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Appendix 3: CCASS - List of PG Messages with Changes
Note : All with value “MAMK” added for the market code **** With new section added
PG Message Description PG Message Description
MA191_T27B Broadcast / Notification Messages MC559_T04I/ MC560_T03B Enquire SI Unmatched Reason
MC550_T04A/ MT537_T06A Enquire Due/Overdue Position MC551_T04B/
MT536_T02B Enquire Stock Account Balance (By Account)
MC304_T11F/ MC305_T11G Enquire ISI (multiple) MC552_T04C/
MT536_T02C Enquire Stock Account Balance (By Stock)
MC303_T11E Enquire ISI (single) MC553_T04D/ MT536_T02D
Enquire Stock Account Movement (By Account)
MC913_T31D/ MC914_T31E Enquire Report Master/Availability List MC554_T04E/
MT536_T02E Enquire Stock Account Movement (By Stock)
MC911_T31B/ MC912_T31C Enquire Report Profile MC901_T28A Online Report
MC555_T04F/ MT536_T02F Enquire Settlement Activity MC910_T31A Update Report Profile
MC557_T04J/ MC558_T03C Enquire SI (multiple) MT536_T02G**** Enquire Money Position / Instruction
MT548_T03A Enquire SI (single)